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Today, the House Financial Services Committee is grilling a group of Wall Street CEOs about their use of TARP funds. The witnesses include Goldman Sachs chief executive Lloyd Blankfein; J.P. Morgan CEO Jamie Dimon; Bank of America CEO Ken Lewis; Morgan Stanley CEO John Mack; Citigroup’s Vikram Pandit; Wells Fargo’s John Stumpf; Bank of New York Mellon chief executive Robert Kelly; and State Street CEO Ronald Logue. Video is available here if you want to play along at home.

Deal Journal is live-blogging the populist outrage.

10:07: Barney Frank, chairman of the committee, maintains that there is a lot of anger out there. The way to diffuse this anger, he opines, is to increase lending. The only way to do this is to deal with “the existing institutions.”

10:09: Frank to the bank CEOs: “I urge you cooperate with us— not grudgingly, not doing the minimum.” And don’t try any “mumbo jumbo” either, Frank warns. Frank says that Congress could not accept compensation restrictions because Hank Paulson — who may actually know something about the subject — discouraged them.

10:14: Representative Royce is talking about how 60% of the mortgages in the U.S. are securitized. Barney Frank bangs his gavel loudly right in the middle of that sentence and talks right over him, complaining that he is over the 90-second limit by 38 seconds.

10:18: A representative clarifies that the Congress is not looking to punish success, but instead business failure. He hopes that the hearings won’t be an excuse for “class war.” Yeah, good luck with that. He adds to the CEOs, however, “many who dish it out to you are partially responsible for the mess we’re in now.”

10:23: Rep. Biggert, a Republican from Illinois, is the first to blame Treasury, not the CEOs, for the lack of TARP disclosure. “What went wrong? Who’s to say we’re not throwing good money after bad?” She clarifies, “my constituents are angry and so am I.”

10:19: Rep. Waters maintains that banks are refusing loans for mortgages, auto loans and colleges. She is particularly appalled that credit card companies are increasing already-high interest rates to 19% or 20%. And we do mean appalled: outrage is almost visibly wafting above her head. “These banks took not only huge amounts of money from taxpayers on TARP, they charged and made money on the money we gave them in fees. We have not talked about the fees these banks have made as they processed their money.”

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10:24: Observation: They should put a pulpit in the House hearing room. It would be so much easier.

10:25: A representative maintains, “If we leave here today knowing that we have restored the confidence of the American people, then this will have been worth it.” We are skeptical: 600,000 job losses last month, a vague $2 trillion bailout plan, and an 18-month recession, and all it will take is one good Congressional hearing to get American consumers whistling again?

10:28: A representative coins a phrase, thus perhaps capping a politician’s life’s work: instead of GSEs, or government-sponsored enterprises, he is going to call the banks TSEs, or taxpayer-sponsored enterprises. Nice. He adds, however, that he believes this is an unsustainable business model.

10:29: The witnesses speak. They are sitting in alphabetical order, which is sort of amusing since of course that’s the only way that Congress could think to tier these banks, one giant Wall Street firm being otherwise indistinguishable from another to those in Washington.

10:29: B for Blankfein is up first. He admits that Wall Street screwed up. He is also frowning fiercely. Denial sets in: “We are not engaged in traditional commercial lending…” Not so far, no, but under federal charter Goldman soon will have to. Blankfein maintains that clients expect Goldman to lend money, for instance through bridge loans. Compared to the $4 billion that Goldman lent to clients in the three months before TARP, the bank has become an active lender since then: Goldman has committed $13 billion to financing for its clients, including Sallie Mae, the CJP Apartments Housing Complex in New Orleans, Verizon Wireless, Pfizer “and a number of other significant organizations.” A Goldman fund has lent $5 billion to companies in need of capital.

10:33: B for Blankfein explains Goldman’s bonus system, which doesn’t have golden parachutes, employment contracts, or severance arrangement for executives. He reminds the House committee that bonuses were down 65% and that Goldman executives gave up their bonuses. “We understood that TARP funds were never meant to be permanent capital. We look forward to paying it back…so that money could be used elsewhere.”

10:35: D for Dimon is up. He objects that J.P. Morgan is lending. “While we did not seek the TARP funds…to strengthen our already-strong capital base…we are using that money to expand the spirit of TARP.” JPM pays $10 billion in tax, he reminds the committee. The firm’s stockholders include “retirees and teachers,” which shows that Dimon, a Queens boy at heart, knows how to play populist outrage to its hilt as well as his Congressional tormentors do.

10:36: “J.P. Morgan is committed to keeping borrowers in their homes by making loan modifications even before a default occurs.” He says the bank has averted 650,000 bankruptcies by 2010 and advocates a loan modification program.

10:38: Dimon points out that his bank bought both Bear Stearns and Washington Mutual, presumably saving part of the financial system. The implication: what more do you people want, blood? Left unsaid, however: J.P. Morgan bought both firms out of distress for pretty amazing prices — and in the case of Bear Stearns at least, would do it again.

10:39: Bank of New York Mellon’s K for Kelly is up. He spends a couple of minutes explaining that his firm is nothing like any of the firms he is currently keeping company with. Instead, it is a “bank for banks,” and has nothing to do with retail consumers, outraged or not. BNY Mellon was also profitable every quarter last year. “We were strongly encourage to participate [in TARP] and we did, very quickly.” BNY Mellon used its $3 billion to buy $1.75 billion in mortgage securities sold by government agencies; it bought $900 million in debt securities of other banks and used the other $400 million to lend money to other banks. None of the money was used for bonuses or junkets, he says. The blazing subtext of Mr. Kelly’s testimony: “Why are we here again?”

10:43: L for Lewis is up. “We are doing our best to manage the interests of shareholders, customers and taxpayers…but it is in all of our interests that banks lend as much as they possibly can.” Much of this was said better in Lewis’s great internal memos.

10:44: Bank of America made $44 billion in new loans to consumers and businesses, and $181 billion in total lending.

10:45: Ahem. Countrywide. Ahem. Lewis reminds the House committee of that quasi-rescue and the implied pain he saved them all by buying the troubled sub-prime lender. He says that BofA also took $20 billion in TARP to close its deal for Merrill Lynch, “and thereby prevented another shock to the financial system,” ahem ahem cough. He plans to pay the TARP money back as soon as possible. He understand that taxpayers are angry, however, and plans to make a “public report” available. “Bank of America has been for years the most efficient large bank in the country,” he says.

10:46: With each banker talking up his own business, and how each one is better than the others, we’re getting an “every man for himself” vibe from the hearings.

10:47: Lewis points out that bankers play “supporting roles, not lead roles” in the economy, and that they are there to support “people who make things.” He encourages humility among bankers. This is a nice riff on John Cusack’s speech in Say Anything, which, let’s face it, is a cultural classic that is probably woefully under-referenced by commercial bank CEOs.

10:48: State Street’s CEO — L for Logue — takes his turn. State Street was profitable in all four quarters of 2008 and expects to be profitable in 2009. He believes that State Street was asked to participate in TARP — $2 billion — because of its crucial role in the back office of Wall Street. The idea that the government would have asked the company to take unnecessary welfare because of its excellence reminds us of that line from “He’s Just Not That Into You” — “You’re just too witty and awesome for him!” State Street has, however, instituted a salary freeze. And, like BNY Mellon, it’s not abundantly clear why the firm should be here since they have so little to do with consumer lending.

10:51: John M for Mack starts talking, but faces immediate protests that his microphone isn’t on. He smiles mischievously, turns it on and says, “I was trying to pull a fast one.” That draws laughs from spectators.

10:52: Along the lines of every man for himself, Mack points out that Morgan Stanley’s Tier One capital ratio was 15%, the highest in the industry. “But we didn’t do everything right. Far from it.” He also distances Morgan Stanley from the retail market, arguing that the firm has a highly institutional focus, helping companies raise $56 billion in debt — including Pepsi and Time Warner Cable — and $40 billion in equity, including a capital raise for GE, as well as $10 billion in commercial loans. He says that Morgan Stanley has not used TARP funds to pay compensation or for lobbying. He points out that he has not received a bonus in two years “and I have never received a cash bonus as the CEO of Morgan Stanley.” We wish the camera had panned to the other CEOs right now, because their expressions must be awesome.

10:56: Mack calls for a way to figure out how to do more lending and more transparency in the markets.

10:56: P for Pandit takes his turn. “Americans from all walks of life are facing economic hardships,” he starts, mentioning laborers. (He neglects to mention corporate-jet salesmen, who are also having a rough year.) Like all the other CEOs, he acknowledges that he understands the outrage of U.S. consumers. He points to Citigroup’s TARP report, which details the bank’s lending to consumers, companies. Citi provided $75 billion in new loans to business and consumers — “a significant commitment given the difficult lending environment,” Pandit adds pointedly. Citi has also kept 4 out of 5 distressed owners in their homes.

10:59: Citi is paying $3.4 billion in annual dividends to TARP. Pandit ringingly endorses his own management decisions since taking over Citi: “I removed the people responsible for Citi’s financial distress…installed new risk processes…and will continue to make decisions that put us on firm footing.” Maybe it depends on how you define “financial distress.” He neglects to mention Citi’s losses on the Old Lane hedge fund, which was run by Pandit and two of his compatriots from Morgan Stanley — one of whom, John Havens, is running Citi’s investment bank.

11:00: Pandit addresses the $42 million airplane. He says that Citi did not understand the new reality of TARP, and canceled the plane delivery once he did. “I get the new reality,” Pandit says. “My goal is to return Citi to profitability as soon as possible and I have told our board of directors that my salary should be $1 a year with no bonus until we return to profitability.”

11:03: John Stumpf of Wells Fargo, on Every Man for Himself (EMFH) duty, points out his bank’s corporate expenses declined by 1% while revenue rose by 7% and that Wells Fargo is “Americans first and bankers second,” as witnessed by its $371 million dividend to taxpayers. He claims double-digit loan growth in everything from student loans to small-business loans. Wells Fargo found solutions for 22% of the 3.2 million mortgage “solutions” reported in the industry.

11:07: Barney Frank says something about “the day is shot anyway,” — oh, you were thinking that too? — and asks for a moratorium on foreclosures until Tim Geithner figures out a stimulus plan. “We know the tragedy of someone getting killed or injured in a war…” and he compares this to foreclosing on defaulted home buyers before a stimulus plan comes through. Really? Yes, really. We’re glad that this comparison is so well-considered and does at all trivialize war.

11:10: Frank says that he knows not all the banks wanted the money and that Congress would be happy to take it bank if the banks feel “ill-treated” in any way. This seems to be a not-so-veiled barb against Dimon and the others who painted themselves as being forced to take government money. Frank asks, “Why in the world are some of the most highly-paid, talented people…why do you need to be bribed to act in the interests of your company?…Why do you need bonuses? Why can’t you just get a salary to do your job? The idea that you need some special incentive troubles people.”

11:12: Mack explains that Wall Street investment banks grew out of small partnerships where people took small salaries until they counted up all the profits at the end of the year. “We love what we do. If you gave me no bonus in the best year I will still be here.” Frank answers, somewhat weirdly, that he appreciates the answer and “will not bill you for my services as an efficiency consultant.” Gosh, we hope banks aren’t using TARP money for those, either.

11:14: House hearings are generally a life-negating experience for reporters, far more so than crisper Senate hearings, because the representatives use all their five minutes of questioning time on a populist soapbox, squandering the time they should be spending asking actual questions of the witnesses, who might actually know something. That is what is happening now. It is beneath us to sum up the tortured “question” being asked right now. Suffice it to say it takes a full two minutes for the questioner to say, “we are here today to talk about lending.”

—Posted by Heidi Moore at heidi.moore@wsj.com

—The rest of this blog is at: http://blogs.wsj.com/deals/2009/02/11/live-blogging-the-wall-street-ceos-grilling-on-capitol-hill/